GAIL hits three-month low; stock down 5%

The stock was down 5% to Rs 322, its lowest level since October 5, 2018, on concerns of weak December quarter earnings.

Shares of GAIL (India) hit a three-month low of Rs 322 apiece, down 5 per cent on the National Stock Exchange (NSE) on Monday on concerns of weak December quarter earnings.

The stock was trading at its lowest level since October 5, 2018, when it touched a 52-week low of Rs 295 in the intra-day trade.

Since November 5, post-September quarter (Q2FY19) results, GAIL has underperformed the market by falling 12 per cent. In comparison, the Nifty 50 index was up 2 per cent during the same period.

Over the course of FY19, consensus earnings forecasts for GAIL have been increased by around 20%, essentially on a combination of expectation of large trading gains and strong LPG prices, analysts at JP Morgan said in a note.

“With the current oil price decline and lackluster spot LNG prices, a repeat of the large trading gains seen in Q2 would be difficult. We would also highlight that implied spot LPG prices are also down sharply (around 15 per cent) and this would also impact earnings,” the foreign brokerage said in a report dated November 14, 2018.

Meanwhile, the brokerage firm Prabhudas Lilladher expects muted earnings performance from GAIL due to lower LPG realisation and weak gas trading earnings. Transmission volumes will also increase.

“We expect GAIL to report sequentially lower EBITDA, driven by a sharp decline in contribution from its gas marketing segment due to unfavorable economics of US LNG volumes amid falling crude prices and higher Henry Hub gas price, which will be partly offset by higher profits on LPG production,” Kotak Securities said in December 2018 quarter earnings preview.

At 02:00 pm, GAIL (India) was trading 4 per cent lower at Rs 325 on the NSE, as compared to 0.75 per cent decline in the Nifty 50 index. A combined 4.91 million equity shares changed hands on the counter on the BSE and NSE so far.